A pulse-taking of the Regina rental market… and a cautionary note before hiring a property manager

For any Albertan city tied to the energy sector, the future of the real estate market and economy looks much brighter in 2011 than it has over last couple of years.

A prime example is Grande Prairie, one of Canada's fastest-growing cities, with nearby oil and gas drilling playing a major role. Located near the British Columbia border, the latest census had the city's population at around 50,000 people. But like most of Alberta, home prices have lagged far behind the national gains in recent years.

Certainly the oil industry took a hit during the recession when prices were down, but the entire province is now starting to pick up thanks to the oil and gas recovery. The real estate market has been slow to adjust in Grande Prairie until recently, but the trend is an increasing amount of activity this year.

And while there's been a lull for a few years, historically Grande Prairie remains a city of fast growth. The city's population has exploded from 7,000 in 1958 to more than 50,000 within 50 years - a 614% increase.

But Grande Prairie is much more than just oil and gas. The keys of the economy also include forestry, construction and agriculture, as well as plenty of British Columbia shoppers crossing the border to do some provincial sales tax-free shopping. The Conference Board of Canada recently predicted a bright future for Grande Prairie's expanding economy.

The economic draw is only part of the picture for Grande Prairie, though. Greg Dobko, a broker with Re/Max in the city, likes to say people move to Grande Prairie for the jobs, but stay for the lifestyle.

The city is home to golf courses, parks, bike trails, as well as community summer festivals and museums. There are also even plans for a $27 million dinosaur museum, although only one-third of the money needed has been collected thus far.

New infrastructure includes a new 200-bed hospital being built for $520 million. Dobko also says oil companies have built super centres ranging from 100,000 sq. ft. to well over 240,000 sq. ft. of shop and office space.

Grande Prairie & Area Association of Realtors President Lesley Craig describes it as a little city that grew up.

"We are just far enough away from any other big centres to be independent - meaning we are a regional centre for health care, retail and consumer services," she says. "If we were closer to say Edmonton, we likely would not have all the same advantages that we have now."

But despite all the latest growth and promising economic expectations, the real estate market has remained more subdued. The average price for a single-detached home was $256,199 in July this year, the lowest point it's been at that month of the year since 2005. Average prices have steadily dropped since peaking in 2007. Dobko says the real estate prices have bottomed out, but activity is picking up in the resale and new home market in recent months. Total sales in July were 77% more than they were a year earlier.

"The new home market is strong both with and without garage," says Dobko. "Resale is still three-quarters of our market."

Active listings peaked in 2010 at about 400, but have since dropped back down closer to 360. Duration of supply is about 11 months, compared to 17 months in 2010, although it was as low as two months in 2006.

"There were a couple of really rough years, but that seems to be in the rear view mirror now, and we are looking straight ahead to a positive future for the industry and for our community," says Craig.

The rental market is still a challenging one for investors to enter, but it significantly improving. Dobko says the vacancy rate is at 5.5%, and the average two-bedroom rent is $875. But the vacancy rate was above 8% in 2009, when investors overshot demand and too many units were constructed.

"There are good opportunities for small investors," says Craig. "With the rental market trends we are seeing, it is a great time to get into residential investment property, particularly since prices are still so affordable."

Along with an improving downtown, investors also look towards Grande Prairie Regional College, although the student population is small. Other rentals are primarily aimed at people moving in for work, as well as lower income earners.

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